Shorewood — The Shorewood Village Board signed off on the creation of a new tax incremental finance district Monday, June 16, paving the way for final approval at a meeting on Friday, June 27.
The new TIF would finance the development of a two-story Metro Market grocery store, a four-story parking garage and a six-story building containing 15,700 square feet of retail space, 96 apartments and some tenant parking on the west side of Oakland Avenue from the old Walgreens parking lot on Kenmore Place to the current Pick 'n Save grocery store at Olive Street.
Shorewood will contribute $13.8 million to the $45.7 million project. The village's contribution includes a $5.5 million grant for the parking structure, which will cost the village $6.3 million including financing costs, and a $6.5 million repayable loan, which equals $7.5 million with financing costs.
The redevelopment would turn a $7.5 million property into a $37.8 million property, creating an additional $30.2 million in incremental value for taxing entities. That increment will be used to help the village recoup its investment over the next 15 years, at which point the additional value will start generating revenue for the tax rolls. During those 15 years, though, taxing bodies will only receive tax revenue on the base value of $7.5 million, foregoing the additional tax revenue created by site improvements.
Construction work will begin in September, with the Metro Market and parking deck being finished by the fall of 2015. Construction work will move north at that time, with the construction of the mixed-use building finishing up in 2016.
Amendment to TIF district
The Village Board also reviewed an amendment to the existing TIF 3 district to allow for the development of Harbor Retirement Associate's 94-unit assisted living and memory-care facility at the far west end of Capitol Drive, near the Milwaukee River.
The amendment would allow for a re-determination of the base value of the district, which has dropped more than $5 million in value since the TIF district was created in 2008. A state law passed last year allows a TIF district that has dropped at least 10 percent in equalized value for at least two consecutive years to request a reset of the base value to its current value, eliminating the decrement.
Prior to the passage of the law, the village struggled to attract developers to the site, as any new development would have had to generate more than $5 million in new taxable revenue before any tax increment could be generated.
Upon completion of the project, the village will provide the developer with a grant of $1.7 million, and the developer will convey Milwaukee River bluff property back to the village. The village grant is expected to be repaid through tax increment by 2022.
The TIF project plan provides for estimated project costs of $16 million. The village is in current negotiations with two developers for two separate projects within the district. Between both of those projects, the village's participation is estimated to be $7.7 million.
Both TIFs will be considered by the Joint Review Board on June 27. The Joint Review Board is made up of representatives from all regional taxing bodies, including the village, Shorewood School District, Milwaukee County, Metropolitan Milwaukee Sewerage District and Milwaukee County Technical College.
Affordable housing debate
Representing Milwaukee County on the Joint Review Board is Teig Whaley-Smith, the county's economic development director. Shortly before Shorewood trustees approved each of the TIF plans Monday night, Whaley-Smith asked that they include an amendment that would extend the TID district for an additional year if the extra tax revenue was put toward the county's affordable housing fund.
The state legislature recently passed a law allowing municipalities to extend TIFs for this purpose. So far, Milwaukee is the first community to adopt this strategy, and Smith has hopes that Shorewood will be the first suburban community to follow suit. Out of the tax increment received during that extra year, 75 percent would be used to support affordable housing and the remaining 25 percent would be used to improve the village's existing housing stock.
Shorewood consulted an outside attorney to review the state statute and determined that the board cannot adopt the resolution until the TID is paid off, nor can the board legally bind a future board to take a specific legislative action. Trustees on Monday night unanimously approved a resolution expressing a desire that a future village board adopt the affordable housing resolution once the Metro Market TID project is fully paid off in 2029.
Smith said he was looking for a stronger commitment from the board, and continued to push trustees for an affordable housing amendment to be included as part of the TIF project plan at the Monday night meeting. Shorewood trustees assured Smith that the village supports affordable housing.
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